In an effort to contain or reduce the rate at which health care costs are increasing in the United States, employers, at-risk commercial insurers, and the government increasingly are pursuing a new approach to provider reimbursement—one that emphasizes value—instead of volume. Value-based reimbursement (VBR) is a category of reimbursement methods that reward physicians and other providers for taking a broader, more active role in the management of member health and pays them for results instead of solely for visits or procedures.
Many forms of VBR involve shifting clinical and financial risk from payers to providers when providers are better-positioned to manage that risk. In particular, payment bundling and/or episode-of-care payments, some forms of accountable care organizations and some versions of the patient-centered medical home take focused approaches to placing the right degree of risk with provider organizations.
Payment bundling is the circumstance wherein Payers are provided the ability to pay a payment bundle rate to a single provider for an episode of care. A payment bundle rate is defined as a pricing method in which a flat amount covers a defined group of procedures and services that fall within the episode of care. To that end, Payers need a solution to process payment bundles (also known as global case rates). A payment bundle is defined as multiple providers joining together contractually to accept a single payment for an entire episode of care. Ideally, the individual providers still perform the same services and submit separate claims as they do today, but Payers need a way to process the individual claims in accordance with the requirements of the payment bundle. An example of what might be included in a single payment bundle might be, payment for inpatient stay, the surgeon, anesthesiologist, rehabilitation facility, primary care physician, ER, and other providers required to deliver the care related to a hip replacement. The payment bundling serves as a payment guideline for multiple providers and services reimbursing a single provider for the entire case and pricing to zero all of the other provider claims. It is then the provider groups' responsibility to reimburse all members appropriately.
Payment bundling stimulates collaboration among providers, aligning their financial interests and increasing care coordination. Such collaboration can result in improved utilization, reductions in complications and other forms of unwarranted variations in care and resulting negative outcomes, while care coordination can help reduce lengths of stay and improve hand-offs among providers.
Accordingly, Payers and/or purchasers need a way to transform the claims stream currently used for fee-for-service (FFS) health care payments into a single (or possibly multiple) episodic payments. It is preferred that such transformation occur before any payments are made (prospectively), rather than as a reconciliation process after payments are made (retrospectively). However, FFS claims are not designed to support episodic payment and current software systems cannot transform FFS claims into episodic payments at the time of adjudication. Current systems and processes pay out all claims in a bundle at 100% and then must go back and retrospectively or post-adjudication.